India

GOVERNMENT OPTIMISM AND AMERICAN DOMINANCE

The Renewable Energy South Asia '96 Conference and Exhibition is on its way to becoming an annual affair. The over 250 delegates to this second international renewables event in Delhi organised by Alternative Development Asia Limited of Hong Kong, included representatives of academic institutes and industry in the fields of wind, solar and hydro power throughout the world.

Dominant, however, were the Americans. The South Asia '96 event coincided with the launch of a US market promotion of renewables, the Asia Pacific Initiative For Renewable Energy & Energy Efficiency, with a strong representation of wind companies (see box). Many of these were also present at the exhibition, though the number of displays from the broad renewables industry was disappointing. Nonetheless, the wind exhibitors present, who dominated the floor, reported dozens of inquiries for wind turbines from prospective purchasers. Interestingly, several companies remarked they had been just as busy with approaches from firms eager to manufacture wind turbine components for them. "We have been offered every conceivable part of a turbine," commented one.

Addressing gathered participants at the conference, B.R. Prabhakara, Secretary of the Ministry of Non Conventional Energy Sources (MNES), said the current installed capacity in India of nearly 600 MW was expected to exceed 700 MW by March 31, the end of India's financial year. He added that his ministry's guidelines for stimulating a wind energy market had spurred no less than 11 states into offering facilities for wheeling and banking of electricity generated from private sector projects. And in the southern state of Tamil Nadu the rate of pay for wind energy is to be hiked by 5%. " What is vital is the need to monitor growth of the wind energy sector. The participation in this conference is a sign of the buoyancy of the renewables sector. We at the MNES are willing to support any initiatives in this sector," Prabhakara told delegates.

At the inaugural session, Minister of State for Non Conventional Energy Sources, P.J. Kurien, said that India's ambitious renewables programme had spawned over 100 joint ventures with international partners in the past two years. With barriers to development replaced by a benign policy of incentives and initiatives, Kurien added that India -- currently the country with the third largest amount of operating wind capacity in the world after the US and Germany -- was slated to become the world's number two wind power producing country by the close of the 8th Plan period at the end of 1997. "There is, however, a need to create a level playing field for the development of renewables. Lack of an integrated and co-ordinated approach to energy policy is a major lacuna in our energy sector development," he lamented, also stressing the need to levy a carbon tax as introduced in some western countries.

Significantly, the government has cut India's Central Electricity Authority out of the loop for clearing power projects for foreign investment, said Kurien. "Now, power projects, including renewable energy power projects, costing less than INR 4000 million and based on international competitive bidding, can be sanctioned by the state without approval of the Central Electricity Authority."

Advice from abroad

Raising money for projects has been one of the major barriers to wind farm development in India and was a topic of the conference. America's National Renewable Energy Laboratory (NREL) was optimistic on the issue. Despite the poor economics of India's State Electricity Boards, investment in India was not ruled out, though packages should be designed carefully. NREL has yet to make any investment itself, though.

Also from the US, Robert Lynette of FloWind Corporation talked about how to protect investments in wind energy. Above all, he stressed that investors must insist on a five-year warranty for all wind power technology. FloWind, he said, is the only one to offer such a warranty in India. Lynette cautioned against using larger machines, or for that matter, newer smaller machines that are "relatively new to the industry as the technology risk may not have been internalised in the price of the machines." Investors, he said "need to tell the manufacturers to put their money where their mouth is."

Launching the United States' Asia-Pacific Initiative for Renewable Energy & Energy Efficiency, Griffin Thompson of the US Export Council for Renewable Energy (US/ECRE) said the initiative aims to identify 100 economically viable renewable energy projects, of which at least 25 will be brought to the project financing stage. Already Winrock International, with support from USAID and US/ECRE, has set up a Renewable Energy Project Support Office (REPSO) in New Delhi "to promote commercialisation." REPSO's Jan Jantzen and S. Gopinath said their office would be focusing on cane cogeneration, rural PV commercialisation, emerging technologies, financial advisory services and outreach -- a package of activities through which REPSO will relate to other organisations, including public and private utilities.

Focusing on the role of the World Bank, economist Rangaswamy Vedavalli, of the bank's Asia Alternative Energy Unit (ASTAE), discussed assistance to alternative energy development and financing. He said that once the 19 renewables projects financed by the bank are completed, they will collectively add 410 MW to Asia's power mix. A traditional investor in Indian energy, the Asian Development Bank, is now also turning to renewables. It is currently in the process of finalising a loan of $100 million for renewable energy development in India. This will be the bank's first loan for renewables. The cash will be loaned to the Indian Renewable Energy Development Authority (IREDA), which will also be the executing agency and principal intermediary. The loan will be guaranteed by the government of India. The interest rate on the 25 year loan will be in accordance with the bank's pool-based variable lending rate system for US dollars. Projects looking for backing should apply to IREDA to access the cash. The loan is for financing major technologies such as bio-methanation while treating industrial effluents, bagasse-based cogeneration, wind energy development and solar thermal heating for hot water and drying. The ADB's Sadiq Zaidi said that by the end of 1995, ADB assistance in the energy sector in India had amounted to $2.2 billion.

Country by country

A series of specific country reports was presented at South Asia '96, including discussion of commercialisation of renewables in the Philippines. Laurie Navarro of the Philippine's Energy Research and Development Centre (ERDC) is managing a Decentralised Energy Systems (DES) project. "The Philippine's Energy Development Corporation, run by the national oil company, is implementing a project for the government with initial funding from the European Union to promote the commercialisation of renewables through its DES project," she told the conference. The DES project provides soft financial loans and technical support to selected Filipino entrepreneurs interested in manufacturing or marketing renewable technologies. "Six technologies have been prioritised for loans, of which wind conversion systems is one," said Navarro. "The technologies that could be given financial support could originate from other countries including those from the South Asian region."

From Sri Lanka, Lalith Gunaratne of the Solar Power & Light Co reported on the country's view of renewables. "The Ceylon Electricity Board (CEB) accepts that renewable energy technologies need to play a role in the energy mix. It has decided that where the grid is not viable, solar PV systems can be used for individual households. In addition, it has been decided to use small hydro and wind power for grid connection."

The World Bank's Asia Alternative Energy Unit has initiated an "energy services delivery" project in Sri Lanka, supported from its Global Environment Facility. The project is scheduled to start at the end of the year and has been granted aid of $39 million. An important feature is the involvement of the private sector and non government organisations," says Gunaratne. The aid will be available to developers planning installation of solar PV systems, small hydro and wind power projects on a grid connected or a decentralised basis. Adds Gunaratne, "The CEB is also getting funds to develop a pilot 3 MW grid connected wind farm in the southern coastal belt."

On the status of Renewable Energy in Nepal, Tej Prasad Gauchan, of the country's Centre for Renewable Energy (CRE) said the National Planning Commission, responsible for energy in Nepal, had opened the energy arena to the private sector. "Permission from the government is required only for projects with over 1000 kW capacity. The licensing process is simplified to ensure that it is completed within 120 days and income tax exemption is offered for 15 years."

Nepal has had a rather unfortunate introduction to wind energy when a 10 kW turbine, presented to the country by Danish overseas aid agency, Danida, was uprooted the day after installation at a site in Kazbeni in western Nepal in 1989. "An alternative energy promotion centre is being proposed by the Planning Commission to look at alternatives. Danida has presented a proposal, not cleared as yet, on wind mapping," said CRE's Surendra Lal Shrestha. Meanwhile the centre is planning to test a 280 W micro wind turbine from Southwest Technology of the USA. It will be installed in the same area as the previous turbine.

A pre-conference tutorial dealt with a number of topics outside the more usual spheres of market policy and technology development. Michael Totten of the US Center for Renewable Energy and Sustainable Technology (CREST) talked about electronic mail and the Internet, explaining that they offer highly cost effective ways of accessing valuable information about sustainable energy development. CREST maintains one of Internet's largest energy sites, servicing more than 250,000 visits a month from 100 countries. "Users are downloading the equivalent of over three million pages of documents on energy efficiency and renewable energy," he said. With numerous publications already on the net, Totten showed how Internet access programmes can save considerable sums compared to conventional faxing, site visits and photocopying.

The need to focus on training and education was outlined in a presentation by Mark Mrohs and Peter McKenzie of Siemens Solar Industries, USA, particularly with regard to gaining a better understanding of the PV market. "The programme should target a broad spectrum of people from policy makers, engineers, designers to end-users," they said.

From the exhibition

Exhibitors were thin on the ground at the South Asia '96 exhibition of renewable energy technologies. No more than 35 companies were represented, including three renewable energy publications, Windpower Monthly among them, together with a travel agent and MNES. Wind energy was the dominant technology with more than 20 companies from the industry putting on displays, although NEPC-Micon was the only pioneer with a stand. Other displays included solar for consumer lighting, water pumping, telecommunications and navigational aids, and solar hot water systems.

The Americans were the dominant force, with representations from wind measurement equipment suppliers, turbine manufacturers and the US ECRE trade mission. All expressed pleasure at the opportunity to do business on a thriving market.

Introducing the Cannon Wind Eagle 300 turbine to India was Dennis Scullion of Cannon Power Corporation of the US. Scullion enthused about the lightweight design and features of the turbine, saying it was "the only Cannon machine we plan to sell to India." But he maintained a strict silence about Cannon's earlier activities in India, other than to say that the company's previous agent, Vinod Arora, was no longer with the company. "We have already released an advertisement to this effect in the Indian papers," he added. Cannon has not yet chosen a new partner. Nonetheless, the wind industry chatline at South Asia '96 was buzzing with the news that DLF Industries Ltd, a Delhi based company with diverse interests in manufacture, construction and project management, was scouting for a wind partner. Its stand at the exhibition remained unmanned and empty, though, so the mystery remained unsolved.

From FloWind, Ronald Roesler admitted that it had taken the company longer to get into the market than expected. "It took 11 months to get started, we had initially thought it would take 6 months." FloWind now has two partners in India -- Renewable Energy Systems (RES) from Hyderabad, which it signed up with in 1994, and Pentafour Solec Technology Ltd of Madras with which it has a technical collaboration. According to Roesler, RES is already making 60% of the turbines and has orders for 222 of the company's 275 kW model. Pentafour has orders for 200 machines. Roesler says the firm is not considering marketing larger turbines as yet.

George Stricker of Zond Energy Systems says there are two types of clients in India: those primarily interested in becoming agents for sales of turbines and those looking to enter joint ventures and manufacture turbines. He said several large construction companies in India had expressed an interest in making Zond's 550 kW machine.

Greg Erdmann of NRG Systems, a supplier of wind measuring equipment, is impressed with the systematic approach taken by MNES to site selection based on wind resource measurements. However, he says he is having a hard time marketing his towers which though lighter and easier to install are more expensive than those assembled locally. "We are considering manufacturing them in India," he remarks. "That will bring down costs substantially."

A second US supplier of measuring equipment, Second Wind, was pleased with the number of customers to its stand. "This is very different from the States. It's been much better than we thought. South Asia '96 has given us a chance to feel the pulse of the industry and meet people," said the firm's Michael Jacobs. He adds that standardisation of quality and dimensions of cables will have to be addressed. Second Wind's Indian partner is Batliboi, a long established engineering company.

Germany was represented by three companies at the exhibition, Enercon, Tacke and a group of manufacturers and institutions from the state of Schleswig-Holstein under an umbrella organisation, German Renewable Energy Enterprises. Tacke remains without a partner after its disagreement with Flovel (Windpower Monthly, January 1996) but has "already shortlisted five companies. We will be deciding on a partner within the next two months."

From the Schleswig-Holstein delegation, which was following up on a previous trade mission to India a year ago, Heinz Max Klinger, said: "The progress in the past year has been more than satisfactory. Jacobs Energie has tied up with The Control Group. We are also looking at co-operation in the fields of solar energy and wind diesel systems." The main problem at the moment, added Klinger was the difficulty of raising loans because of the high interest rates in India.

Spanish company Ecotècnia was represented by JMP Ecotècnia Ltd, which has a 60% stake in the Indian joint venture. "We have already received an INR 260 million order from IPCL to set up a 5 MW wind farm at Dhank in Gujarat," said JMP's Rahul Amin, adding that 22, 225 kW units will be in the ground by September. "Ours is not a selling arrangement. In three years, we have plans to produce a 100% indigenous turbine."

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